The Yanks Are Coming
Fortune (09/04/00) Vol. 142, No. 5 p.301; Tomlinson, Richard

The growing number of Europeans who invest online has led to an explosion of European discount brokerages. London-based J.P. Morgan predicts that the total number of European traders who use discount brokers will increase from four million to 18 million between 2000 and 2003. Over the next few years there will likely be a consolidation of the European discount brokerage business, with powerhouses such as Britain's Barclays Stockholders and Germany's Comdirect possibly coming out on top. But Schwab, eTrade, TD Waterhouse, and other American discount-brokering giants are not sitting still. In London, Waterhouse and Charles Schwab Europe claim to have more online customers than native discount brokerage Barclays. The American presence is significantly smaller on the continent, but U.S. brokerages are not deterred. "Our aim is to take more than 10 percent of the market overall and become No. 1 or No. 2 in the region," says eTrade's head of European operations Johann Brenner. Many Europeans believe that the complexity of the continental business ethic will stymie American brokerages, but they ironically predicted the same fate for America Online's and Yahoo!'s European ventures a year ago and were proved incorrect. European cultural obstacles cut both ways. For example, cross-border financial transactions that are obstacles for American businesses are also obstacles for Europeans. U.S. discount brokers also have the first-mover advantage while continental brokers are still mostly confined to their national markets. Merrill Lynch and HSBC plan to launch "the first global online banking and investment service" later this year, each company maintaining equal stake in that venture. And both Schwab and eTrade have started to offer additional financial service products to increase European holdings.


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